tci Medicare Compliance & Reimbursement - 2003 Issue 23

Hospitals: CMS ISSUES FINAL OUTLIER RULE

Hospitals will have until Oct. 1, 2003, before their most up-to-date cost data is used to calculate "outlier" payments under the final rule issued June 5 by the Centers for Medicare & Medicaid Services. Outlier payments are designed to ensure that hospitals will not stint on care in extraordinarily complex, high-cost cases; they provide higher reimbursement than that associated with the relevant diagnostic-related group under the inpatient prospective payment system. However, some hospital operators, notably Tenet Healthcare, have gamed the system to obtain excessive outlier payments. Until now, Medicare has calculated each hospital's "cost-to-charge" ratio using its most recent...

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